NBP near curve contracts shed an average of 5.12p on Wednesday as demand concerns loosened and the weather outlook appeared less volatile.

   

Gas Market

NBP near curve contracts shed an average of 5.12p on Wednesday as demand concerns loosened and the weather outlook appeared less volatile. With above average temperatures and wind levels forecast for next week, the significant availability of LNG sendout and Norwegian flows, despite ongoing supply restraints, is expected to reduce reliance on storage withdrawals. There are currently 6 LNG cargoes expected to arrive into the U.K. between today and the end of the month. A narrowing of the price spread between the Summer-25 and Winter-25 contracts, from an average of just under 6p over the past week to just half a penny by yesterday’s close is also encouraging for British storage stock levels for the coming winter. The Spot market shrugged off a modestly undersupplied system to fall by 5.50p day-on-day, while the Day ahead contract also chose to ignore the ongoing Norwegian supply constraints to post a loss of 4.82p per therm.  

Power Market

An upward revision to wind power output levels for next week fed into losses across the GB Baseload prompt on Wednesday. The Day ahead contract posted a day-on-day loss of £0.85/MWh to settle at £128.80/MWh. Further out, the losses continued, as near and far curve products were pressured down by declines across the NBP gas market. The front month contract posted the largest day-on-day, falling by £4.90/MWh to settle at £109.75/MWh. Similar to the losses across gas, power and oil markets, European and UK carbon prices fell back on Wednesday. Spot EUA’s declined by €1.48 day-on-day to close at €78.65 a tonne. UK Allowances for Dec-25 shed £1.32 to end the session at £46.30 a tonne.      

Oil Market

Crude oil prices opened in negative territory on Wednesday morning due to increases in U.S. crude and distillate stocks and demand concerns. The decline comes after 3 straight days of gains, with the front month Brent contract shedding $1.82 day-on-day to settle at $75.18 a barrel. Further downside was added by hawkish comments from the U.S. Federal Chair Jerome Powell that highlighted that the U.S. economy was in a good place, meaning the Fed would not rush to cut interest rates. Higher interest rates can weigh on consumer spending and limit crude demand. Demand concerns also weighed in, as OPEC released its Monthly Oil Market Report, where it cut its eurozone GDP growth forecast to 0.9%.  WTI for March delivery fell by $1.95 to close out the session at $71.37 a barrel.    

Markets this morning

NBP futures have opened in negative territory this morning, continuing yesterday’s decline. The evolving geopolitical landscape and renewed hopes of an end to the conflict between Russia and Ukraine is feeding into the downside. Meanwhile, reports of warmer temperatures and high wind speeds reducing gas for power demand from next week are also weighing on prices. The March-25 contract last went though at 128.70p per therm, down 6.29p from yesterday’s close. Activity on the prompt is yet to get going. The potential peace deal between Russia and Ukraine is also exerting downward pressure on oil prices with front month Brent last transacting at $74.18 a barrel, one dollar below the previous close.